I realize this is probably a lot of information but I've been on the IRS website multiple times and CANNOT figure out whether or not I owe taxes:

1. I am currently on an F-1 visa for graduate school in Washington, D.C.

- I arrived in the U.S. in Sept 97 on an F-1 visa for boarding high school.
After graduating from high school in May 99, I received another F-1
visa for 4 years for college (Sept 1999 to May 2003) I did a
semester abroad during my junior year and was out of the U.S. for
approximately 7 months from May 2001 to January 2002.

- From September 2003 to May 2004, I was on an Optional Practical Training for approximately 9 months. Apart from my semester abroad and my vacations, I have been in the U.S. continuously. Other
than my OPT period (to be explained below), I held no jobs except sprodic on-campus employment. Am I definitely considered a resident for tax purposes?

2. While I was on my OPT, I worked at a thinktank in D.C. for
approximately 9 months. I received a stipend (which was provided to me under a 1099-MISC instead of a W-2). For the year 2004, the total amount I received was $7,750 (which was why I didn't think I originally had to file b/c it was under the $7,950 filing amount) No taxes were withheld on this amount: do I owe social security and/or DC resident taxes even if OPT income is generally exempt for students?

3. I am a citizen of the Republic of Korea. If I do have to pay taxes, Do I qualify for any tax treaty benefit?

4. Given that I will not probably not make the filing deadline, do I
need to be worried about the penalties to be charged?

Thank you in advance. I would really appreciate ANY help that people are willing to provide regarding this issue.

AtlantaTaxExpert

Jung:

1) Since you were on a F-1 visa for all that time, you were considered an "exempt individual". The time under F-1 visa does not count for the Substantial Presence Test. You must file as a nonresident alien using Form 1040NR, using Schedule C to report the Form 1099-MISC income and deduct any expenses associatd with earning that income. You also need to file Form 8843 to account for your days under the F-1 visa.

2) Because you are a nonresident alien, you are exempt from Social Security and Medicare taxes or self-employment taxes. For this reason, do not file Schedule SE. However, you cannot claim a standard deduction, only the itemized deductions allowed on the Schedule A that is part of the Form 1040NR.

3) Under the tax treaty with the Republic of Korea, the first $2,000 of any income earned is exempt from taxation by either the U.S. or any state governments.

4) It looks like you will owe some taxes, and therefore will owe a late payment penalty, but it will not amount to much. Your total taxable income is not more than $2,650, which means your tax is about $265. The late fees and interest should not exceed $5.

5) If DC has an income tax, you may owe them as well, though, again, it will not be much. The $2,000 tax treaty exemption applies to the DC taxes as well.

Jung

Dear Atlanta Tax Expert,

Thanks for your reply. I'm still having some trouble filling out my 1040-NR and was wondering if you could help me out. Even if my total income from my 1099-MISC of $7750 was earned on an OPT, do I still need to report this income even if I'm exempt from most taxes? (so this should be reported on line 21?) Given that I'm currently a graduate student on an F-1 visa, are there any more exemptions (other than the US-Korea tax treaty on line 22?) I can claim since I currently have no income and am paying tuition?

You had mentioned that my total taxable income should not be more than $2650...how did you get to this figure? Basically, it seems like I shouldn't owe much taxes since I'm a student who received a one-time income from a 1099-MISC but the 1040-NR doesn't seem to reflect this.
I filed for an extension given that I was unsure about the whole filing process.

Thank you so much for your help. I really appreciate it.

AtlantaTaxExpert

Jung:

You need to download IRS Pub 519. While you are at it, download the instructions for Form 1040NR. Read both of them throroughly.

Other than the $2,000 exemption noted below and the $3,100 personal exemption (which is entered on Line 38 of Form 1040NR, there are no other exemptions. You cannot claim a standard deduction, but you CAN claim itemized deductions (like income taxes paid to DC from your paycheck and donations to charity).

As noted, you will pay income taxes on $2,650 (this assumes you have NO expenses listed on Schedule C to further reduce the Form 1099-MISC income). Take the net income from Line 31 of Schedule C, subtract $2,000 and transfer it to Line 13 of Form 1040NR. Enter $2,000 on Line 22 and cite the US-Korea Tax Treaty on Item M, Page 5 of Form 1040NR.

Go through the line-by-line instructions and try to fill out the Form 1040NR.
The tax tables can be found in the Instructions for Form 1040NR.